TaxTMI 
TaxTMI 
2015 (1) TMI 807
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....ical fertilizer at any rate or price other than that fixed by the Government of India. For the various assessment years tax was imposed on the nitrogen component at the rate of 6.5% on the sale of NPK 10:26:26. The facts, which are not in dispute is that the NPK was being sold in the ratio 10:26:26. However, the Assessing Authority initiated reassessment proceedings under Section 21 of the Act, 1948 for levying tax on the entire price of NPK 10:26:26. The Assessing Authority by order dated 16.1.2003 held that although there was a tax liability on the Nitrogen component but since there is no exemption in respect of Phosphate and Potassium contents of the fertilizer, these items would also be liable for tax. Aggrieved IFFCO filed an appeal before the Additional Commissioner, who has also dismissed the appeal by his order dated 23.12.2010. Thereafter the revisionist has filed a second appeal under Section 10 of the U.P Trade Tax Act read with Section 57 Value Added Tax before the Commissioner Tribunal Lucknow which too dismissed the appeal by the impugned order dated 7.3.2013. Hence this revsion. I have heard Sri Bharat Ji Agarwal , learned Senior Counsel assisted by Sri Vaibhav Pa....
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....ramed. Issue no.1 being as to whether tax exemption could be granted to Phosphate and Potassium content of NPK 10:26:26 and the Tribunal referring to the Government Order dated 12.2.2001 and the G.O. dated 13.8.2002 held that since these government orders did not mention NPK 10:26:26 the Phosphate and Potassium content of NPK, therefore, would not be exempted from tax. Sri Bharat Ji Agarwal referred to the G.O. dated 12.2.2001 which has also been referred by the Tribunal in its impugned order and which provides that no tax under the U.P. Trade Tax Act, 1948 shall be payable on the sale of Potash and Phosphate content of the chemical fertilizer mentioned in the said G.O. with effect from 1.1.2001. The NPK complex 10:26:26 however does not find mention in the said Government Order but the submission of learned Senior Counsel is that when specifically the Government itself in its various circulars has referred to rate of tax on Nitrogen content only at 6.5% per metric ton and in the D.O. Letter dated 11.3.2013 has specifically mentioned that Phosphate and Potassium contents of NPK 10:26:26 would be exempted from tax with effect from 28.2.2002 the Taxing Authorities were clearly discr....
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....included in the exemption list whereas it is a mater of fact that the NPK 23:23:0 fertilizer is also a fertilizer of the same category but it has been omitted from the list and, therefore, the classification made under the Notification 1995 does not hold ground on a rational basis. Para-13 of the judgment of the Supreme Court reads as follow:- "13. From a perusal of the notifications in question, it is evident that other fertilizers of the NPK category i.e. N.P.K. 12:32:16; N.P.K. 15:15:15; N.P.K. 20:20:0; N.P.K. 14:35:14 are included in the exemption list, whereas it is a matter of fact that the NPK 23:23:0 fertilizer is also a fertilizer of the same category, but it is omitted from the list. According to the notification dated 2nd November, 1994, the intention of the State was not to tax the sale of "potassium phosphatic fertilizers" but when we go into enquiry of nomenclature of these chemical compounds, we find that the NPK 23:23:0 is a "nitro-phosphate fertilizer" which has no potassium (K) ingredient. The Notifications dated 10th April, 1995 and 15th May, 1995 clearly include NPK 20:20:0, which is also a nitro-phosphate fertilizer with zero content of potassium (K). This cl....
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.... Sri Bharat Ji Agarwal next submitted that the circulars issued by the Taxing Authority from time to time are binding upon them and, therefore, Circular dated 11.3.2013 (Annexure-6 to the revision) which specifically states that Phosphate and Potassium contents of the NPK 10:26:26 were exempted from trade tax with effect from 2002 was binding upon the Assessing Authority as well as to Appellate Authority and no tax liability would have been imposed on IFFCO. He has also placed reliance upon a decision of the Supreme Court in the case of Commissioner of Sales Tax A.P. vs. M/s Indra Industries (2000 U.P.T.C-472) wherein the Supreme Court in para-4 held that though the circular of Taxing Authority is not binding on the courts and is not binding on the assessee, however, the interpretation that is thereby placed by the Taxing Authority on the law is binding on that Taxing Authority. Paras-3 and 4 of the said judgment reads as follows-: "3. The said circular issued on 19th January, 1991 by the Commissioner of Sales Tax remains in effect till date. It has not been shown that it has been withdrawn. It is, therefore, very remarkable that it should be contended on behalf of the very Sales....